Federal budget 2015: Indonesia braces for aid cuts

Funding for some of the long-term Australian aid projects established in Indonesia in the wake of the Boxing Day tsunami is due to expire this year, paving the way for budget savings.The Coalition announced in December it would slash its overall aid budget by $1 billion next financial year.If Australia’s aid program in Indonesia reflects this 20 per cent cut, more than $120 million will need to be shaved off its 2014-2015 budget of $605.3 million.The savings are likely to be found through projects that have come to an end and a reassessment of where Australia can provide the most value.

The emphasis in Indonesia is expected to move away from post-tsunami bricks and mortar projects such as building roads, hospitals and schools, to areas where Australia can provide expert policy advice.

For example, between 2006 and 2011 Australia helped Indonesia build or extend more than 2000 schools.

Its education program is now focused on training principals and teachers and accrediting schools.

Funding expires this year for a $463 million project for improving water, sanitation and roads and transport, known as the Indonesia Infrastructure Initiative, although it could be extended.

A $22 million electoral support program, which helped develop the system of registering 190 million voters used in the 2014 election, also comes to an end this year.

And a disaster risk management program announced by Kevin Rudd and former president Susilo Bambang Yudhoyono has already been scaled back.

Aaron Connelly, East Asia research fellow from the Lowy Institute, said if the Abbott government mishandled the aid cuts by linking them to the Bali nine executions, diplomatic relations could be inflamed.

“The risk is that Indonesia will see this as retaliation,” he said.

A recent Lowy poll showed only 28 per cent of Australians thought the Abbott government should suspend aid to Indonesia, while 27 per cent said it should suspend military and law enforcement co-operation.

ChildFund’s chief executive officer, Nigel Spence said Australian aid should be focused on reducing poverty.

“It would be deeply unfortunate if the cuts were perceived as retribution,” he said.

“We feel strongly that decisions about aid should not be focused on issues such as where asylum seekers are being housed or pay back for executions,” he said.

Over the next three financial years, $3.7 billion will be cut from the overall foreign aid budget.

Shadow Assistant Treasurer Andrew Leigh said the cuts mirrored those advocated for by the extreme right party UKIP in the UK.

“Here you have Tony Abbott taking the same position on aid as the extreme right takes in British politics from 0.37 to 0.22 per cent of the national income and to cut it still further really is going to hurt so many more vulnerable people in the region as well as our relationships with those countries,” he said.

Oxfam’s chief executive, Helen Szoke, said the aid organisation remained in the dark on how the cuts would fall, saying it was not in Australians’ nature to be stingy for those who need help.

“Australia’s standing in the world is significantly diminished just by the scale of these aid cuts,” she said.

“We’re a rich country, not withstanding we have challenges domestically… and for a country like Australia to make cuts to this depth is just very disappointing.”